Owning a piece of commercial or residential real estate is a dream many people hope to achieve. But it pays to be prudent about how you go about the acquisition. There are some illegal real estate practices you need to be aware of. You could lose a lot of money if you fall into the wrong hands.
Real estate wire fraud, for example, is a real concern. As of 2020, there were over 13,500 cases resulting in $213 million in losses. The report goes on to show that many of the victims do not report the scams. That means the number may not be indicative of the exact picture.
Indeed, both sellers and buyers share equal vulnerability. They can become victims of wire fraud, foreclosure scams, title fraud, and identity theft. When that becomes the case, you may need the services of business startup lawyers or real estate attorneys to help with litigation.
Our article explores illegal real estate practices and what you can do about them.
- Discriminatory Acts That Violate Federal Fair Housing Act
The federal Fair Housing Act prohibits direct housing provider discrimination. The Act covers real estate companies and landlords. It also extends to entities like banks, municipalities, and home insurance companies. They cannot base the decision to provide relevant services on sex, race, or color. The same applies to family status, national origin, and disability.
So what if you find yourself in this unfortunate position? You can pursue legal recourse by hiring a real estate lawyer. Please note the process of litigating such cases can be complex.
The onus is on you to prove the discrimination per the federal Fair Housing Act. The lawyers must understand the case sufficiently to get a favorable outcome for your issue.
When Would You Need A Business Startup Lawyer?
Often, people who are looking for commercial spaces are forced to lose good locations due to the biases of property owners. The Act also applies to commercial property. You could be looking for business premises for your new company. But, the real estate company might have turned you down on what seemed like discrimination. You can then talk to business startup lawyers for a way forward.
The real estate lawyers provide a wide range of services, including:
- Breach of contract,
- Tenant-landlord dispute,
- Warranty issues,
- Lien claims,
- Judgment against owners, and more.
Look for due diligence on the real estate attorneys. It helps to know their expertise and industry reputation. They should have strong negotiation skills and conflict resolution expertise.
You also need a team that will be accessible and has enough resources to manage the case to the end.
To close sales, real estate agents can leave out important information. They may not, for example, let you know about structural issues. Please note that it is not always a deliberate move on their part.
But sometimes, they do so intentionally to make a property look more attractive. If you find yourself a victim, seek legal recourse through your real estate lawyer.
- Wire Fraud on Escrow Funds
We saw wire fraud to be a major issue in real estate. So, what does it mean? Someone can communicate with you via phone, text, or email claiming to be from an escrow company. They will give you instructions on where to wire the funds.
It can be hard to know you are dealing with unscrupulous individuals because of how they work. They will set up websites that share many similarities with the lending company.
The spoofing techniques are very advanced, so it can be easy to fall for their scam. It could be something as simple as a missing number or letter, which could pass your attention. If you wire the money as per the instructions, you will fall victim.
The best way to protect yourself is to be very keen about any communication you receive. Avoid clicking on links or sending money without verifying the transaction.
- Conflict of Interest
Brokers or real estate agents will not engage in any business if there is any conflict of interest. These include:-
- An undisclosed dual agency where the broker represents both the seller and buyer. If they plan to do so, they should ensure the relevant parties are aware of the fact.
- Self-dealing brokers who are more concerned about profit than protecting the client’s interest.
- Preparing legal documents or offering legal advice to clients by brokers. This falls under the purview of practicing real estate lawyers. They are in charge of drafting sales documents and deeds.
- Predatory Lending Practices
Predatory lending practices are common with loan flipping. The lender persuades you to keep refinancing your mortgage. What this exposes you to are high fees and crippling interest rates. Yet, you find yourself trapped because you have used your home equity as collateral for the loan.
Be wary of any lender who seems to be pushing this particular agenda. Your alarm should go off if they start pursuing without you having shown interest in the loan.
Also, please seek financial advice on matters related to mortgages. Go through documents with a keen eye. Take note of the loan estimates, third-party fees, and terms and conditions.
- False Promises
The law prohibits brokers and agents from making egregious promises to clients. Let’s say you’re buying commercial property. The real estate agent promises that due to the property location, you have a guarantee of making a profit. If there is no way to prove the claims, that will fall under false promises.
It is not uncommon for salespeople to make claims that they cannot back up. The onus is on you to be more realistic in your expectations.
Do not accept unverifiable blanket statements which sound like a sales pitch. You can, for example, talk to other commercial property owners.
Getting a historical view of the money-making potential of the area would be a good step. You can get a real picture from such information rather than having blind faith in what the broker says.
You work hard for your money, and it is only fitting that you do all you can to protect it. This is especially important when talking about significant investments like real estate.
The reality is that you can lose a lot of money if you are not careful. There are scammers and unscrupulous real estate agents, and brokers in the sector. They may use illegal practices to get your money or close a sale.
For any real estate disputes, please contract the services of real estate lawyers. They have the relevant expertise to help settle such issues.
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